AICD submission on Criminalising Wage Theft

The AICD strongly condemns businesses that engage in the deliberate underpayment of wages and rely on the so-called “wage theft” model. As an advocate for good governance, the AICD believes that companies should always comply with the law and directors can play an important role in fostering a culture of compliance. Respect for employees is a key part of that. Wage theft should never be regarded as “a cost of doing business”, and we support enforcement that reinforces that. However, in light of the serious consequences of criminalisation, the AICD submitted that the imposition of a criminal penalty should only apply to the most serious cases which demonstrate deliberate, exploitative and systematic wage theft.

The key points of our submission included:

1. In the AICD’s view, due to the serious consequences of a conviction, criminalisation should only apply to the most egregious conduct. In the event that the Government elects to legislate a “recklessness” offence, we consider it important that the legal test of “recklessness” align with its long-standing legal definition. We are concerned that the phrasing of the proposed test of “recklessness” is too broad and may capture non-deliberate conduct such as taking a particular interpretation of an Award or Workplace instrument.
2. The AICD does not support the creation of “deemed liability” for directors on the basis of a “failure to prevent” wage underpayment as we consider this is at odds with the Council of Australian Governments (COAG) principles for assessment of directors’ liability provisions (COAG Principles). It also fails to recognise that, under the Corporations Act, directors are already subject to a statutory duty to act with care and diligence, meaning they can be personally liable when a corporation breaches a legal obligation (such as adherence to workplace relations laws).
3. Given the existence of two state wage theft criminalisation Acts (Victoria and Queensland), it is critical that any federal Act “cover the field” to avoid duplication and confusion.
4. The simplification of the Industrial Relations system should be a priority reform area, as we consider that this is the cause of the bulk of wage underpayment. As such, the AICD supports proposals aimed at incentivising employers to proactively self-identify and rectify instances of wage underpayments.